Looking Ahead
The result of the election and the appointment of Thailand’s 25th Prime Minister mean that the real-estate industry on Samui can finally start planning for the future.
Whether you agree or disagree with the result of the election, the fact is that Thailand has returned to a democratically elected government. And, as such, the country can now start to deal with the issues that have been impeding the continued growth of the real-estate market.
Political uncertainty, possible changes to the Foreign Business Act (FBA) and fears over investing into a country run by generals who took power by staging a military coup have all been major factors in potential real-estate investors taking a ‘wait-and-see’ approach.
Now the result of the election has been ratified, and the Prime Minister announced, these issues can at least be addressed and buyer confidence can start to return. Despite all of the negative issues, and an obvious slow-down in some areas of the industry, Samui has actually survived and continued to have an active property market throughout. In fact, during this period many investors have seized the opportunity to buy and develop whilst prices have remained more stable.
It’s now, when confidence begins to return for the less adventurous investor, that prices can be expected to begin rising once again. In the short-term, property sellers have to be realistic in their expectations as this recovery will certainly take time. It will remain a buyers’ market for now. However, buyers too have to be aware that once the confidence is high, and the issues dealt with, the opportunity for bargains will become fewer. Eventually the market will swing back in favour of the seller.
Property industry professionals are confident that the formation of the new government will lead to increased consumer confidence and a full recovery of the real-estate market. Khun Somchao Tantaterdtham, president of the Thai Real Estate Association, has said that foreign investors remained interested in entering the property business in Thailand. He believes that the market will remain stable in the first quarter of 2008, whilst the new government take control and lays out its plans for the economy. And, in his opinion, this will be an excellent time for home buyers to capitalise on lower prices.
Khun Prasong Owlarn, the president of the Housing Business Association, mirrored these thoughts and stated that the new government would be able to regain confidence amongst investors, developers and consumers. And he foresees more economic activity starting in the second quarter, which will have a very positive impact on the real-estate industry.
The new government will have to make important decisions on a number of issues involving the future of the economy. These will be crucial in determining the long-term future of the property market. Foreign investors wait in anticipation for a decision on any changes to the FBA and, once this has been clarified, all the pent up potential could well result in mass foreign investment. Samui is ideally placed to benefit from an influx of foreign investment as the majority of buyers tend to target the most popular resort areas.
Samui is without doubt rising up the ladder of must-visit worldwide destinations. Improvements and expansions to the airport, which include the introduction of more airlines and more international destinations, have certainly made the island more easily accessible for many visitors. And the vast increase in hotel rooms and rental villas suggests that the island is expecting and is prepared for a significant increase in tourist numbers. Large corporations and retail companies are becoming more apparent, and this too can only be in anticipation of tapping into this island as a thriving profitable location.
As a boost to the national economy the new government is likely to introduce more free-trade agreements which will open Thailand up to trade openly with other nations keen to invest in the Thai economy.
Khun Pakorn Malakul Na Ayudhya, the chairman of the Stock Exchange of Thailand, expressed confidence that market sentiment would improve after the formation of the coalition government, and Khun Vana Bulbon, the chief executive of UOB Asset Management, stated that political stability and teamwork within the cabinet were more important than the personalities elected. “In my opinion, Thais won't mind who the Prime Minister will be. What we want now is a capable government that can steer the country for the future.”
It’s hoped that the new government will prioritise the property sector issues, as it is a major factor driving the overall economy. A booming property industry will impact on other related businesses, such as the production of construction materials and furniture; more agents, lawyers, property consultants, property management companies; and an increase in the issue of insurance policies. Therefore, it can also have a considerable affect on employment figures; especially on an island like Samui. If you look around the island you’ll see that tourism and real-estate related businesses provide the vast majority of local employment. Another possible way the government may encourage more property sales is to introduce certain proposed tax incentives.
So, whatever your political allegiances may be, as far as the real-estate industry on Samui is concerned, having any democratically elected government, in a position to deal with the issues that have negatively affected property sales, can only mean that there’s finally a light at the end of the tunnel. It has been a very difficult time for any real-estate related business on the island, and it’s a period that everyone will be happy to see the end of.
With Thailand back under democratic rule, the perceptions of some potential buyers will be far more favourable, and once action is taken to boost the country’s economy the reasons for deferring the decision to buy will be completely removed.
The immediate outlook has definitely improved and those surviving real-estate industries on Samui can finally start looking towards a brighter future. Who knows? Maybe by the end of 2008 the problems that have dominated the industry in recent times will be completely forgotten and Samui will witness and benefit from the income generated by an industry that’s primed to play a very important role in the island’s future economy.
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